Evans suggests that if Flickr were able to better monetize their traffic that they could generate much more revenue than they do today.

Of course part of what has made Flickr as successful as they are in my opinion is exactly that advertising is fairly sparse on the site. It’s Flickr’s clean attractive look as much as anything that makes it a pleasant place for people who love visual stimulation to hang out at.

From Evans: “With online advertising gaining so much traction, Flickr would be a very attractive target given its traffic and user demographic. For the sake of argument, let’s assume Flickr changed business tactics and introduced two high-profile advertising slots throughout the service. I choose two because it would be significant without pissing off most of Flickr users, who regard Flickr as their property and are resistant to change of any kind.

If Flickr could get $5/CPM, that would generate $10-million in advertising/year based on the assumption it’s getting about 100 million global pageviews/month. It’s not a lot of revenue given the conservative approach to how much advertising Flickr would present and how much it would charge but, nevertheless, it would give Flickr an additional $250-million based on Blodget’s formula.

Then, you’re looking at a company worth $1.75-billion to $3.25-billion. Add on a takeover or IPO premium of perhaps 25%, and you’re looking at a valuation of $2.2-billion to $4-billion.”

I do question Evan’s $5 CPM guess on Flickr. I’m not sure that Flickr could get CPMs this high. Google doesn’t include ads on their image search pages. My guess is that when people are looking at and for specific imagery that advertising may be less effective than when used contextually in other ways like Adsense.

Still a $4 billion valuation on Flickr is interesting nonetheless. As a very active Flickr user though I sure hope I don’t see all those monetization advertisements any time soon.

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Bleh; I just left this comment on Mark Evans’ site, but I’ll repeat it here.

If one really thinks that the best way to monetize Flickr is by advertising and counting page views, then they shouldn’t be let near any sort of business. Advertising would be Flickr’s death knell.

Yahoo is sitting on top of one of the biggest and *well-indexed* collections of intellectual property in the world. Intellectual property that has a lot of value in its own right; just ask any of the pro photographers who use Flickr for marketing.

Yahoo needs to buy a print shop – Shutterfly comes to mind. Then they can reap all the profit margins from users who want prints, calendars and whatnot of their photos. Then they can also let users *sell* their photos, and again, profit from the transaction.

Then they can also let users sell their photos as stock; Getty images sold for $2.4 Billion, and IMHO Flickr would be worth even more.

Flickr is so dominant in photo sharing that it would quickly become *the* go to place for image buyers and sellers alike.

And to boot, I’d wager most users would be thrilled to have the opportunity to make a little money from their images, rather than having a lot of them pissed off as they would be with advertising.

(Of course, to do that, they’d have to be a site focused on photography and photographers rather than introducing random crap like video.)

I do not know what the percentage of users who have paid vs those who have not, but what would be the effect of offering ads only on free accounts and hiding the ads from those who have paid for pro accounts? This would probably not piss off the hard core users who are more likely to be paying customers.

Yahoo has already annoyed people after they bought Flickr. First the login transfer issue, then the increase in censoring people’s entire accounts just for a couple artistic shots with a bit of flesh.

Slapping ads on it would probably be a last draw for several people. There’s a reason I’m happy to pay for the service: first my friend’s are on there; and second I can send people links to flickr and know that they aren’t being bombarded with ads — just photos — even if they aren’t members.

I would be just as annoyed if I went to a gallery and it had ads between the paintings.